For landlords, buying a tenanted property at auction can be a high-risk, high-reward investment. While it provides an opportunity to acquire rental properties quickly, it also comes with potential legal traps—historic deposit issues, rent arrears, and disrepair claims. This case study outlines how I helped a landlord navigate a complex possession claim where long-term tenants used multiple counterclaims to resist eviction.
The Background
My client, a landlord, purchased a tenanted property at auction in 2010. As is common in auction sales, he had limited information about the property’s history and the tenancy terms. The tenants, JE and GE, had been in occupation since 2007, and when my client took over the property, he had no reason to believe that there were any outstanding issues with deposit protection or disrepair.
Fast forward to 2023, the tenants had built up £6,000 in rent arrears. My client, assisted by his son RP, initially sought to recover possession through a Section 21 notice. However, the tenants defended the claim by arguing that a 2007 tenancy deposit had not been protected. This effectively blocked the Section 21 route, forcing my client to proceed under Section 8 of the Housing Act 1988, which allows landlords to recover possession due to rent arrears—but crucially, this opened the door for disrepair counterclaims.
The tenants counterclaimed, alleging:
- My client failed to protect a 2007 deposit (which he never received, as it was supposedly paid to the previous landlord).
- They had also paid an additional deposit in 2010, which they claimed was unprotected.
- The property suffered from damp, leaks, an overgrown and unruly garden, and an eyesore of a rotting mattress!
What should have been a straightforward possession claim turned into a three-year-long legal battle. The matter was only resolved at the start of this week on the first day of a three day trial.
Throughout the process, RP, who had been handling much of the case on behalf of his father, became visibly stressed. The anxiety of the proceedings had taken its toll, and by the time we reached trial, he looked exhausted. The landlord himself had simply had enough—he just wanted his property back so he could get out of the game altogether.
Legal and Practical Issues
Rent Arrears and Possession Claim
The landlord had previously tried to obtain possession using Section 21, which would have allowed for a quicker eviction. However, the tenants raised the alleged deposit issue, defeating the Section 21 route and forcing him to pursue a Section 8 claim based on rent arrears. This strategy carried risk, as it gave the tenants the opportunity to raise disrepair claims that could offset the arrears.
The 2007 Deposit Dispute – A Legal Trap for Landlords
A key issue in the case was that my client never received the alleged 2007 deposit—it was supposedly paid to the previous landlord. None of the conveyancing documents from the auction purchase indicated that a deposit was transferred with the sale.
Despite this, under the law, successive landlords inherit liability for deposit protection failures of previous owners. This meant my client could be penalised for something that happened before he even owned the property. While we did not accept that the deposit was ever paid, the legal framework was against us.
Many landlords are unaware of this legal trap, which can result in penalties for failing to protect a deposit they never even received.
The 2010 Deposit Dispute
The tenants also claimed that they had paid a second deposit in 2010 when my client briefly used a property management company. However, there was no clear evidence of this deposit in any bank records or agency documentation. Given that the burden of proof was on the tenants, we were prepared to challenge this claim in full.
Tenants May Raise Disrepair Claims Tactically
The tenants alleged serious disrepair, including damp, leaks, and poor maintenance of the garden. However, there were two key issues with their claim.
First, they had never reported these issues to the landlord or the council before the proceedings started. Their first complaint to the council came only after possession proceedings had begun, suggesting that it was more of a litigation tactic than a genuine issue.
Second, the landlord had actually invested in the property, including installing central heating, which did not exist before he purchased it, and replacing all the windows with double glazing. He had taken care of the property and had been responsive to previous repair requests.
Despite these facts, disrepair claims are commonly used to defend possession proceedings, and we had to address each allegation carefully.
Unequal Firepower in Litigation
One of the difficulties in these proceedings was that the tenants qualified for legal aid, which covered their legal fees. Meanwhile, my client had to fund his own case privately. This created an imbalance where the tenants had access to legal representation without personal financial risk, while the landlord had to weigh up the costs of continuing litigation.
Resolving the Dispute
The case proceeded to trial before His Honour Judge Boora at Walsall County Court. It was listed for a three day contested trial with oral evidence to be given by my client and his son.
However, after hearing preliminary legal arguments, the judge gave strong indications that he was likely to rule in my client’s favour. It was refreshing to have such a no-nonsense judge that could see through much of what the Defendants were claiming.
The Judge’s Indications
- The 2007 deposit was likely paid, but the penalty would be minimal.
- A second deposit in 2010 was “highly unlikely.”
- The disrepair claim was exaggerated—the tenants suggested a £50,000 claim, which the judge called a ‘fantasy’.
- The guttering issue was the only real point of concern, but it would not be enough to extinguish the rent arrears.
- The tenants were legally aided, meaning there was little prospect of recovering costs from them.
The judge sent the parties out to try and resolve their differences.
Negotiation and Final Settlement
Initially, the tenants were completely resistant to any settlement that required them to move. Their absolute red line was that they wanted to remain in the property. They were paying rent that was significantly below market rate, and having been there since 2007, they had accumulated a large amount of belongings and clutter, making the idea of relocating deeply unappealing. It was clear they were firmly entrenched in their position, and settlement discussions seemed unlikely to be productive.
At this point, I knew that a different approach was required. The indications from His Honour Judge Boora had been overwhelmingly in my client’s favour, and I had to make it absolutely clear to the tenants’ barrister that if his clients did not agree to leave voluntarily, they were almost certainly going to be forcibly evicted by a court order.
The key to the negotiation was relentless pressure. I made it crystal clear that my client was going to get possession of the property one way or another. The relationship between the parties had totally broken down. The only question was whether his clients would leave on their own terms or be forced out by a possession order—one which would still leave them with rent arrears.
After sustained pressure, their barrister eventually returned with a surprising counteroffer—they would leave, but only if my client paid them money to help with a new deposit and first month’s rent elsewhere. The cheek of it! From my client’s perspective, this was a frustrating request—paying to remove tenants who owed £6,000 in arrears was deeply unfair. However, this was actually a financially strategic decision. Continuing with the trial would mean:
- Paying my brief fees for the next two days.
- Enduring more stress and uncertainty.
- Risking that the judge changes his mind once he hears the oral evidence.
Instead, by agreeing to the settlement, they could secure vacant possession immediately, save on legal fees, and walk away knowing the case was closed. In the end, my client saw the wisdom in this approach and a deal was eventually struck.
Client Reaction: Relief and Gratitude
The moment the settlement was signed, RP’s relief was palpable. His anxiety over the case had been immense—this legal battle had dragged on for three years, and he had been dealing with it day in and day out. His stress had been making him ill, and this final resolution felt like an enormous weight had been lifted.
When everything was finalised, both RP and my client were so grateful that they hugged me—a rare but deeply rewarding moment as a barrister. They knew that without the hours of preparation, strategic negotiation, and firm advocacy, this case could have dragged on for another two days, racking up legal fees and prolonging their ordeal. Instead, they had certainty, closure, and most importantly, their property back in their control. But don’t take my word for it, I received this lovely WhatsApp message after:
This case was a perfect example of how strong negotiation skills, strategic pressure, and an understanding of judicial indications can secure the best possible outcome for a client—without the stress and expense of drawn-out litigation.
Key Takeaways for Landlords
Buying at Auction Can Be Risky
When purchasing a tenanted property, check for outstanding deposit liabilities. Even if you never received a deposit, you could still be held accountable for a previous landlord’s failure to protect it.
Sometimes a Settlement Is the Best Strategy
While my client was likely to win at trial, settling saved him thousands in legal fees and ensured a definite end to the tenancy. Delaying litigation for a “moral victory” is rarely the best business decision.
Legal Aid Creates an Unequal Playing Field
Many tenants qualify for legal aid, allowing them to defend possession proceedings without personal cost. Meanwhile, landlords must fund their own representation, often making litigation an expensive and stressful ordeal.
Conclusion
This case highlights the challenges landlords face when dealing with long-term tenants in arrears, particularly when historical deposit issues and disrepair counterclaims arise.
If you are facing similar issues, contact me today to discuss your options.
